SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant /_/
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Check the appropriate box:
/_/ Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
SOUTHERN INDIANA GAS & ELECTRIC COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
SOUTHERN INDIANA GAS & ELECTRIC COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a(i)(1) or 14a-6(j)(2).
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Exchange Act Rule 14a-6(i)(3).
/_/ Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
_____________________________________________________________________________
2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:*
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/_/ Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
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<PAGE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
20 N.W. FOURTH STREET
EVANSVILLE, INDIANA 47741-0001
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held March 22, 1994
TO THE STOCKHOLDERS OF
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY:
NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of SOUTHERN
INDIANA GAS AND ELECTRIC COMPANY is called and will be held on Tuesday, the 22nd
day of March, 1994, at 3:00 P.M., Central Standard Time, at the Company's Norman
P. Wagner Center Administration Building, One North Main Street, Evansville,
Indiana, for the following purposes:
1. To elect three directors of the Company to serve a term of three years
and until their successors are duly elected and qualified;
2. To consider a proposal to approve a Stock Option Plan for
implementation in 1994;
3. To ratify the appointment of Arthur Andersen & Co., as the Company's
auditors; and
4. To transact any and all business in connection with the foregoing and
any other business that may properly come before the meeting and any
adjournment or adjournments thereof.
By Order of the Board of Directors,
A. E. Goebel
Secretary
Evansville, Indiana
February 22, 1994
It is important that your stock be represented at the meeting in order that
a quorum will be assured. Stockholders, whether or not they expect to be present
at the meeting, are requested to fill in, date and sign the enclosed proxy card
and return it promptly in the accompanying addressed envelope, which requires no
postage. If you attend the meeting and so request, the proxy will not be voted.
<PAGE>
Location of March 24, 1994
Shareholders' Meeting
(Printed version contains map showing location of meeting)
Norman P. Wagner Operations Center
Southern Indiana Gas and Electric Company
One N. Main Street 465-4153
Parking for shareholders will be provided in the Employee
and Visitor's parking lot on the corner of North Main and
Division Streets. Please use the entrance marked "Main
Street Entrance" on the above map. Entry to the building
will be through the doors indicated by the arrow.
<PAGE>
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
20 N.W. FOURTH STREET
EVANSVILLE, INDIANA 47741
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
MARCH 22, 1994
The management solicits your proxy for use at the annual meeting. Shares
held in your name and represented by your proxy will be voted as you instruct if
your proxy is duly executed and returned prior to the meeting. Shares
represented by proxies that are returned signed but without instructions for
voting will be voted as recommended by the management. Shares represented by
proxies that are returned unsigned or improperly marked will be treated as
abstentions for voting purposes. Abstentions and broker non-votes are not
counted in the tally of shares voted at the meeting. You may revoke your proxy
at any time before it is exercised by written notice to the Company, received
prior to the time of the meeting, or orally at the meeting. Dissenting
stockholders in connection with any item presented do not have rights of
appraisal. The proxy and this statement were first mailed to stockholders on or
about February 22, 1994.
If you are a participant in the Company's Automatic Dividend Reinvestment
and Stock Purchase Plan (the "Plan"), whole shares credited to your account in
the Plan will be voted by the Plan Agent in accordance with a voting instruction
form that will be furnished to you by the Plan Agent, provided the form is
completed by you and returned to the Plan Agent. If the separate voting
instruction form is returned signed but without instructions, your Plan shares
will be voted in accordance with the recommendations of the Company's
management. If the separate voting instruction form for the Plan shares is not
returned to the Plan Agent or if it is returned unsigned or improperly marked,
none of your Plan shares will be voted unless you vote in person. If you wish to
vote the Plan shares in person, a proxy may be obtained upon written request
received by the Plan Agent (Harris Trust & Savings Bank, Reinvestment Services,
P.O. Box A3309, Chicago, Illinois 60690) at least 15 days prior to the meeting.
Matters to be Voted Upon
As of this date, the only known business to be presented at the 1994 annual
meeting of stockholders is (1) the election of three directors of the Company to
serve for a term of three years and until their successors are duly elected and
qualified, (2) the consideration of a proposal to approve a Stock Option Plan
for implementation in 1994, and (3) the ratification of the appointment of
Arthur Andersen & Co., as the Company's auditors for 1994. However, the enclosed
proxy authorizes the proxy holders named therein to vote on all matters that may
properly come before the meeting and it is the intention of the proxy holders to
take such action in connection therewith as shall be in accordance with their
best judgement. Only shares held by those present at the meeting or for which
proxies are returned will be considered to be represented at the meeting. For
the purpose of determining a quorum, all shares represented at the meeting are
counted without regard to abstentions or broker non-votes as to any particular
item.
Record Date
The Board of Directors has fixed February 4, 1994, as the date for the
determination of stockholders entitled to notice of and to vote at the meeting.
Only stockholders of record at the close of business on February 4, 1994, will
be entitled to vote at the meeting or at any adjournments thereof, unless the
Board of Directors fixes a new record date for the adjourned meeting which it
must do if the adjourned meeting date is after July 20, 1994.
Voting Securities
The Company's voting securities outstanding on the record date consisted of
85,895 shares of 4.8% Preferred Stock, 25,000 shares of 4.75% Preferred Stock,
75,000 shares of 6.50% Preferred Stock, and 15,705,427 shares of Common Stock.
Each share is entitled to one vote on each question presented to a vote of the
stockholders at the meeting. However, unless the holder personally appears at
the meeting, shares for which no proxy is returned (whether registered in the
name of the actual holder thereof or in nominee or street name) will not be
voted.
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Cost and Method of Solicitation
The cost of preparing, assembling, printing, and mailing this proxy
statement, the enclosed proxy and any other material which may be furnished to
the stockholders in connection with the solicitation of proxies for the meeting
will be borne by the Company. In order to be assured that a quorum of
outstanding stock of the Company will be represented at the meeting, proxies may
be solicited by officers and regular employees of the Company, personally, by
telephone, telegraph, fax, or mail, and if deemed advisable, the Company may
also engage the services of Continental Stock Transfer & Trust Co., 2 Broadway,
New York, New York 10004 and /or D. F. King & Co., Inc., 77 Water Street, New
York, New York 10005. It is anticipated that the cost of such solicitations will
not exceed $10,000 plus reasonable out-of-pocket expenses. The Company may also
reimburse brokers, banks, nominees and other fiduciaries for postage and the
reasonable clerical expense of forwarding the proxy material to beneficial
owners of stock.
Security Ownership of Certain Beneficial Owners
As of December 31, 1993, each of the following stockholders was known to
the management of the Company to be the beneficial owner of more than five
percent of the outstanding shares of any class of voting securities as set forth
below.
Amount and
Title Nature of Percent
of Name and Address of Beneficial of
Class Beneficial Owner Ownership Class
- ----- --------------- ---------- -----
Preferred Stock, HAMAC & Co. 15,000 Shares 8.1%
$100 Par Value c/o Crestar Bank Registered Owner
Box 26246
Richmond, VA 23261
IDS Certificate Company 75,000 Shares 40.3%
c/o IDS Financial Services, Inc. Registered Owner
3000 IDS Tower-10
Minneapolis, MN 55440
Item 1--Election of Directors
The Board of Directors consists of 11 members of whom approximately
one-third are elected each year to serve terms of three years or until the
director's earlier retirement pursuant to the Board of Director's Retirement
Policy. It is intended that the enclosed form of proxy will be voted for the
election of Messrs. Ronald G. Reherman, Donald E. Smith, and James S. Vinson,
all of whom are now members of the Board, for three-year terms or until the
director's earlier retirement. In any election of directors, the persons
receiving a plurality of the votes cast are elected to the vacancies to be
filled.
Each of the three nominees has signified his willingness to serve if
elected. If, however, any situation should arise under which any such person
should be unable to serve, the authority granted in the enclosed proxy card may
be exercised by the proxy holders for the purpose of voting for a substitute
nominee. Set forth below is information with respect to the nominees and the
other members of the Board of Directors. If not otherwise indicated, the
principal occupation listed for any individual has been the same for at least
five years.
The Board of Directors recommends a vote "for" all of
the nominees listed below.
Nominees for election for terms to expire in 1997
Ronald G. Reherman, 58, Chairman, President, and Chief Executive Officer of the
Company since April 1991; President and Chief Executive Officer of the Company
1990-1991; President and Chief Operating Officer of the Company 1988-1990;
Executive Vice President and General Manager of the Company 1985-1988. He is
also a director of Ohio Valley Electric Corp., Indiana-Kentucky Electric Corp.,
National City Bancshares and the National City Bank of Evansville. He has been a
director of the Company since 1985.
Donald E. Smith, 67, Chairman, President, and Chief Executive Officer of First
Financial Corporation, Terre Haute, Indiana; Chairman, President, Chief
Executive Officer, and director of Terre Haute First National Bank, Terre Haute,
Indiana; President and director of Terre Haute Oil Corp., President and director
of Princeton Mining Co. Inc., President and director of Deep Vein Coal Company;
2
<PAGE>
and President and director of R. J. Oil Co., all of Terre Haute, Indiana; and a
director of Blackhawk Coal Corporation. He has been a director of the Company
since 1964.
James S. Vinson, 52, President and Professor of Physics at the University of
Evansville in Evansville, Indiana since 1987. Vice President of Academic Affairs
and Professor of Physics at Trinity University at San Antonio, Texas 1983-1987.
He has been a director of the Company since 1989.
Current directors whose terms expire in 1995
Donald A. Rausch, 63, Chairman of the Board, President, and Chief Executive
Officer, since 1990, of UF Bancorp, Inc., Evansville, Indiana; Chairman of the
Board and President, since 1985, of Union Federal Savings Bank, Evansville,
Indiana. He has been a director of the Company since 1982.
John H. Schroeder, 73, Chairman, since 1990, and President, 1952-1990, and
director of Crescent Plastics Inc., Evansville, Indiana, manufacturers of
plastic products. He is also Chairman and director of Cresline Plastic Pipe Co.,
Inc., and Wabash Plastics, Inc. He has been a director of the Company since
1982.
Richard W. Shymanski, 57, President, since 1983, of Harding, Shymanski &
Company, Professional Corporation, Certified Public Accountants, Evansville,
Indiana. He has been a director of the Company since 1989.
Norman P. Wagner, 69, Chairman of the Board of the Company 1990-1991; Chairman
and Chief Executive Officer of the Company 1988-1990; Chairman, President, and
Chief Executive Officer 1986-1988. He is a director of CNB Bancshares, Inc. of
Evansville. He has been a director of the Company since 1978.
Current directors whose terms expire in 1996
Melvin H. Dodson, 72, President, since 1958, and director of Dodson Engineering,
Inc., Evansville, Indiana, consultants to the petroleum and natural gas
industries. He has been a director of the Company since 1970.
Walter R. Emge, 71, President and director of Porca Company, of Fort Branch,
Indiana, formerly Emge Packing Co., Inc. He has been a director of the Company
since 1972.
Robert L. Koch II, 55, President and Chief Executive Officer of George Koch
Sons, Inc., Evansville, Indiana, manufacturers of industrial painting systems
and distributors of heating and air conditioning equipment. He is also a
director of CNB Bancshares, Inc. of Evansville and Bindley Western Industries,
Inc. of Indianapolis, Indiana. He has been a director of the Company since 1986.
Jerry A. Lamb, 59, Chairman of the Board of American Sheet Extrusion
Corporation, Evansville, Indiana, manufacturers of plastic molded products. He
is also a director of CNB Bancshares, Inc., of Evansville. He has been a
director of the Company since January 1, 1993.
Certain relationships and related transactions. Melvin H. Dodson is sole
owner of Dodson Engineering, Inc. which firm in 1993 performed certain
consulting and operational services relative to gas storage fields and oil
producing properties for the Company, and is expected to perform such services
in 1994. During 1993, the cost of such services was $216,710, which the Company
believes to be a fair and reasonable price for the services rendered.
Committees and meetings of the Board of Directors. The Board of Directors
conducts its business through meetings of the Board and through its committees.
The Board of Directors has established three standing committees, the Executive
Committee, the Audit Committee, and the Compensation Committee. There are no
nominating or other committees of the Board of Directors.
The Executive Committee acts on behalf of the Board of Directors when the
Board is not in session, except on those matters which require action of the
full Board. The committee, which met 14 times in 1993, meets as required. The
members of the committee are Ronald G. Reherman (Chairman), Melvin H. Dodson,
Donald A. Rausch, John H. Schroeder, and Norman P. Wagner.
The Audit Committee, which met twice in 1993, meets at least twice a year
with the independent auditors of the Company and the internal auditing staff to
review audit procedures and recommendations for improvements in internal
controls. The members of this committee are Donald E. Smith (Chairman), Melvin
H. Dodson, Walter R. Emge, Jerry A. Lamb, and Donald A. Rausch.
3
<PAGE>
The Compensation Committee, which met three times in 1993, advises and
recommends to the Board of Directors the salaries to be paid to the Chairman of
the Board (when also serving as an employee of the Company), the Chief Executive
Officer, the President, the Chief Operating Officer, and the Chief Financial
Officer. The committee also administers the Company's Corporate Performance
Plan. The members of this committee are Richard W. Shymanski (Chairman), Robert
L. Koch II, John H. Schroeder, James S. Vinson, and Norman P. Wagner.
The Board of Directors had 13 meetings during 1993. No director attended
fewer than 75 percent of the Board of Directors meetings or the aggregate of
such meetings and meetings of the committees of the Board of which he is a
member.
Compensation of directors. Each non-employee member of the Board of
Directors is paid an annual fee of $12,000 plus $600 for each meeting attended.
Each non-employee director is paid $600 for each meeting of the Executive, Audit
or Compensation committees attended. Directors are reimbursed for ordinary
expenses incurred in performance of their duties.
Security Ownership of Directors and Executive Officers
The following table shows the beneficial ownership, reported to the Corporation
as of December 31, 1993, of Common Stock of the Company, by each director, the
Chief Executive Officer, and each of the other executive officers named in the
Compensation Table found under "Executive Compensation" below. Also shown is the
total ownership for such persons and other executive officers of the Company as
a group. No member of the group is the beneficial owner of any of the Company's
Preferred Stock.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership (2)
----------------------------------------------------------------
Name of Beneficial Owner (1) Direct Indirect Total Percent of Class
- ------------------------- ------ -------- ----- ----------------
<S> <C> <C> <C> <C>
Melvin H. Dodson......................... 30,400 2,066 32,466 0.21%
Walter R. Emge........................... 4,533 -- 4,533 0.03
Robert L. Koch II........................ 1,777 -- 1,777 0.01
Jerry A. Lamb............................ 500 -- 500 --
Donald A. Rausch......................... 5,409 -- 5,409 0.03
Ronald G. Reherman....................... 5,766 373 6,139 0.04
John H. Schroeder........................ 13,854 1,421 15,275 0.10
Richard W. Shymanski..................... 932 3,376 4,308 0.03
Donald E. Smith (3)...................... 10,947 803 11,750 0.07
James S. Vinson.......................... 137 -- 137 --
Norman P. Wagner......................... 3,737 13,461 17,198 0.11
Andrew E. Goebel......................... 3,296 -- 3,296 0.02
J. Gordon Hurst.......................... 1,296 -- 1,296 0.01
All of the above and other
executive officers as a group (15)....... 104,901 0.67
<FN>
- -----------
(1) Beneficial ownership includes those shares over which an individual has
sole or shared voting, or investment powers, such as shares in which the
spouse, minor children or other relatives living in the home of the named
person have a beneficial interest and shares held in the Company's
Automatic Dividend Reinvestment and Stock Purchase Plan and other trust
accounts.
(2) Includes shares held jointly or in other capacities, as to which in some
cases beneficial ownership is disclaimed.
(3) Donald E. Smith is a director and President of Princeton Mining Company,
which owns 240,124 shares of the Company's Common Stock; director and
President of R. J. Oil and Refining Co., Inc., which owns 86,221 shares of
the Company's Common Stock; director of Blackhawk Coal Corporation, which
owns 125,733 shares of the Company's Common Stock; Chairman, CEO, President
and director of Terre Haute First National Bank, which holds 27,848 shares
of the Company's Common Stock as trustee; and President and director of
Terre Haute Oil Corporation, which owns 2,133 shares of the Company's
Common Stock. The aggregate number of such shares represents 3.07 percent
of the Company's Common Stock outstanding.
</FN>
</TABLE>
4
<PAGE>
Item 2--Approve Adoption of Stock Option Plan
The Company's Board of Directors believes that the future growth and
profitability of the Company depends, in large measure, on its ability to retain
and motivate key employees. To further this goal, and to relate the compensation
of such key employees directly to the returns realized by shareholders, the
Board has adopted the Southern Indiana Gas and Electric Company 1994 Stock
Option Plan (the "Stock Option Plan") subject to approval of the Stock Option
Plan by the Company's shareholders and, to the extent authorized but unissued
stock is used, the approval of the issuance of Common Stock under the Stock
Option Plan by the Indiana Utility Regulatory Commission ("IURC").
The Stock Option Plan is intended to promote the interests of the Company,
its shareholders and its customers by ensuring continuity of management and
increased incentive on the part of officers and other key employees of the
Company responsible for major contributions to effective management, through
facilitating their acquisition of equity interests in the Company. Accordingly,
the Board recommends that the Company's shareholders approve adoption of the
Stock Option Plan, the text of which is attached as Exhibit A to this Proxy
Statement.
Summary of the Stock Option Plan. The Stock Option Plan authorizes the
granting of options to purchase up to 500,000 shares of the Company's Common
Stock to officers and key employees of the Company and its subsidiaries. Options
granted under the Stock Option Plan may constitute incentive stock options
("ISOs") (within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "Code") or nonqualified stock options ("NSOs")
(collectively, "Options").
Common Stock issued pursuant to the Stock Option Plan may be either
authorized but unissued Common Stock or reacquired Common Stock, or both. The
Stock Option Plan will be administered by the Compensation Committee, consisting
of at least three Directors of the Corporation, no member of which may be an
employee of the Corporation or a subsidiary or shall have been eligible within
one year prior to the director's appointment to receive an Option under the
Stock Option Plan or any other plan of the Company or its subsidiaries under
which participants are entitled to receive Common Stock (except as permitted by
Rule 16b-3(c)(2)(i) under the Securities Exchange Act of 1934).
The Compensation Committee will determine the employees to whom grants of
Options will be made under the Stock Option Plan, the number and terms of the
Options to be granted to each employee selected, the time or times when Options
will be granted, the period during which Options will be exercisable, and the
exercise price per share of Common Stock. The exercise price may not be less
than the fair market value of a share of Common Stock at the date the Option is
granted. The aggregate fair market value, determined on the date of grant, of
shares with respect to which ISOs are granted which are exercisable for the
first time by an employee during any calendar year under the Stock Option Plan
and any other plan of the Company or its subsidiaries may not exceed $100,000.
No officer or key employee is eligible to receive an ISO if he or she owns stock
(including stock the ownership of which is attributed to him or her pursuant to
Section 424(d) of the Code) possessing more than 10 percent of the total voting
power of all classes of stock of the Company or a subsidiary.
The Option exercise price will be payable by the optionee in cash or by
tendering to the Company previously acquired shares of Company common stock, or
by any combination of cash and stock, including, if arranged through a broker,
cash related to a proposed sale of Option shares. Options granted to an employee
under the Stock Option Plan may not be transferred by the employee otherwise
than by will or by the laws of descent and distribution, and such Option may be
exercisable during such person's lifetime only by the employee or his or her
guardian or personal representative.
The terms of an Option may provide that it will be or become exercisable at
such times or upon such events as the Compensation Committee may specify;
provided, however, that except in the case of disability of the optionee after
grant, no option will be exercisable during the six-month period following its
grant. No Option may be exercisable after the expiration of ten years from the
date such Option is granted. The terms of an Option may provide that it is
exercisable only in specified installments during the Option period but in that
case may also provide that it will nevertheless become exercisable in full upon
the happening of certain events.
If an optionee's employment with the Corporation or a subsidiary terminates
for any reason (other than the Optionee's death, disability or retirement or
upon the Company's termination of the optionee's employment for cause), the
Option granted to such person will, except as otherwise provided by the
Compensation Committee, expire on the date of such other termination of
employment. In the event of termination for cause, the Option will terminate
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upon receipt of notice of such termination. In the event an optionee's
employment terminates due to retirement or disability, ISO's will terminate 3
months after such termination in the case of retirement and 12 months after such
termination in the case of disability, and NSO's will terminate 5 years after
such termination or, in each case, on their respective expiration dates, if
earlier. Upon the death of an Option holder, the Option will terminate on the
earlier of the Option's expiration date or one year from date of death.
The Compensation Committee may, from time to time, grant dividend
equivalents in respect of Options, crediting a grantee with an amount equal to
the amount of cash or stock dividends that would have been paid on the shares
covered by the Option if the covered shares had been issued and outstanding on a
given record date. Such dividend equivalents will be paid only in cash.
The Stock Option Plan provides that, if there occurs a change in the number
of outstanding shares of Common Stock by reason of a reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, rights offering or other change in the corporate structure of the
Company, the Compensation Committee may make such adjustments, if any, as are
appropriate in the number and kind of shares that may be issued under the Stock
Option Plan, including in the number and kind of shares which are subject to
outstanding Options, or in the Option price thereof.
The Board may discontinue the Stock Option Plan at any time and may from
time to time amend or revise the terms of the Stock Option Plan as permitted by
applicable statutes, except that it may not revoke or alter in a manner
unfavorable to the Option holders, any Options then outstanding, or amend the
Stock Option Plan without shareholder approval so as to materially: (i) increase
the benefits accruing to participants under the Stock Option Plan; (ii) increase
the number of securities which may be issued under the Stock Option Plan; (iii)
modify the requirements as to eligibility for participation in the Stock Option
Plan; or (iv) increase the cost of the Stock Option Plan to the Company.
The Stock Option Plan will terminate on December 20, 2003 unless terminated
earlier by action of the Board. As of February 4, 1994, the market price of the
Company's common stock was $305/8 per share.
It is not possible at this time to determine the Options that may be
granted to the Company's Executive Officers under the Stock Option Plan.
Federal income tax consequences. Under the present provisions of the Code,
the Federal income tax consequences of the Stock Option Plan are summarized as
follows:
1. With respect to NSOs: The granting of an NSO to an employee will
not result in taxable income to the employee or a deduction in computing
the income tax of the Company or any subsidiary. Upon exercise of an NSO,
the excess of the fair market value of the shares acquired over the Option
price is (a) taxable to the optionee as ordinary income and (b) deductible
in computing the Company's income tax, subject to satisfying applicable
withholding requirements and general rules relating to reasonableness of
compensation.
2. With respect to ISOs: An optionee will not be deemed to receive any
income at the time an ISO is granted or exercised, although the exercise
may give rise to alternative minimum tax liability for the optionee. If an
optionee does not dispose of the shares acquired on exercise of an ISO
within the two year period beginning on the day after the day of the grant
of the ISO or within the one year period beginning on the day of the
transfer of the shares to him or her, under present Federal income tax law
the gain (if any) on a subsequent sale (i.e., the excess of the proceeds
received over the option price) will be long-term capital gain and any loss
he or she may sustain on such sale will be treated as a long-term capital
loss.
If the optionee disposes of the shares within the two year or one year
period referred to above, the disposition is a "disqualifying disposition," and
the optionee will generally realize ordinary income taxable as compensation in
the year of the disqualifying disposition to the extent of the excess of the
fair market value of the shares on the date of purchase over the option price,
and the balance, if any, will be long-term or short-term capital gain depending,
generally, on whether the shares were held more than one year. To the extent the
optionee recognizes compensation income with respect to a disqualifying
disposition, the Corporation will be entitled to a corresponding deduction.
Required votes. Provided a majority of shares entitled to vote are present
at the meeting, the affirmative vote of the holders of a majority of the shares
voted at the meeting is required to approve the adoption of the Stock Option
Plan.
The Board of Directors recommends a vote "for" this proposal.
6
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Executive Compensation
General. The following table sets forth compensation paid by the Company to
each of the executive officers of the Company during the past three years whose
total cash compensation for the calendar year 1993 exceeded $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
(a) (b) (c) (d) (e) (f)
Annual Compensation
------------------------------
Long-Term All Other
Name and Principal Position Year Salary Bonus (1) Compensation (2) Compensation
- --------------------------- ---- ------- -------- ---------------- ------------
<S> <C> <C> <C> <C> <C>
Ronald G. Reherman 1993 $275,250 $25,720 None $ 1,700(3)
Chairman of the Board 1992 252,575 23,500 None 11,300(3)
President and Chief Executive Officer 1991 229,010 30,938 None 17,400(3)
Andrew E. Goebel 1993 150,542 21,750 None None
Senior Vice President, Chief Financial 1992 143,646 13,850 None None
Officer, Secretary and Treasurer 1991 136,781 19,538 None None
J. Gordon Hurst 1993 133,708 18,750 None None
Senior Vice President 1992 122,292 11,200 None None
and General Manager of Operations 1991 109,917 15,300 None None
<FN>
- -----------
(1) These amounts are cash awards under the Corporate Performance Plan based on
performance for the prior plan year as described in the report of the
Compensation Committee below.
(2) The Company had no long-term compensation plans during any of the last
three years and no award or payment of restricted stock, options, stock
appreciation rights, or cash, or any other form of long-term compensation,
for or during these years. See "Compensation Committee Report on Executive
Compensation," beginning on page 8, and the information provided under Item
2, for a discussion of a Stock Option Plan applicable to certain officers,
staff and managers of the Company.
(3) Amounts listed represent directors fees. Pursuant to a Board of Directors
policy adopted in 1991, directors fees to employee directors have been
phased out over a three-year period ending February 28, 1993.
</FN>
</TABLE>
Change of control agreements. In order to insure the Company of continuity
of management and operations in the event of a change of control of the Company,
agreements have been entered into between the Company and all of the officers
named in the compensation table above. The agreements provide for the
continuation of salary of the named officers for the lesser of a period of three
years, or until retirement age, at their existing compensation levels in the
event of a change of control of the Company.
Retirement plans. All officers participate in the Company's trusteed,
non-contributory tax-qualified Pension Plan for Salaried Employees (the "Pension
Plan"). Retirement income, as defined in the Pension Plan, is based on an
employee's average monthly earnings during the highest-paid five consecutive
years in the Pension Plan of the employee's final 10 years of continuous service
prior to retirement or other termination of employment and is calculated in two
increments: 1.33 percent of such average monthly earnings for each year of
accredited service or part thereof up to a maximum of 30 years; plus .67 percent
of such average monthly earnings for each year of accredited service or part
thereof in excess of 30 years to a maximum of 10 years. Earnings do not include
compensation received under the Company's Corporate Performance Plan. Amounts
payable under the Pension Plan are not subject to social security or other
offset.
The years of service in the Pension Plan credited to officers named in the
compensation table above are R. G. Reherman-30 years, 6 months; A. E. Goebel-21
years, 1 month; and J. G. Hurst-24 years.
7
<PAGE>
The following table illustrates the estimated retirement income payable
under the Pension Plan, based on the specific remuneration levels and years of
service classification shown.
<TABLE>
<CAPTION>
Pension Plan Table
Years of Service
---------------------------------------------------------------------
Covered
Remuneration 15 20 25 30 35
- ------------ -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$100,000................... $19,950 $26,600 $33,250 $39,900 $43,260
125,000................... 24,940 33,250 41,560 49,875 54,060
150,000* and above........ 29,925 39,900 49,875 59,850 64,870
<FN>
- ---------
* As of January 1, 1994, the OMNIBUS Budget Reconciliation Act of 1993 (OBRA
'93) limited annual compensation to $150,000 for purposes of pension
calculations under tax-qualified pension plans.
</FN>
</TABLE>
The Company has a non-qualified Supplemental Retirement Plan (the
"Supplemental Plan') covering certain senior officers of the Company who qualify
under the applicable length of service and other eligibility provisions. It is
presently anticipated that Mr. Goebel and Mr. Hurst will qualify for benefits
under the Supplemental Plan. The Supplemental Plan provides for supplemental
retirement income to be paid such that, when combined with benefits receivable
under the Company's Pension Plan, total retirement benefits paid will be equal
to 50 percent of the average of the senior officer's final three years base
salary excluding bonuses. In the case of death, survivor benefits are payable to
surviving spouses, if any, at an actuarially adjusted level. The Company has
entered into an agreement with Mr. Reherman that is similar to the Supplemental
Plan except that the retirement income paid is equal to 60 percent of his
highest annualized salary as Chief Executive Officer of the Company. The Company
has purchased life insurance on the participants sufficient in amount to fund
actuarially all of the future liabilities under the Supplemental Plan and the
agreement.
Death benefit plan. The Company has a Supplemental Post Retirement Death
Benefits Plan for officers and other senior executives to provide retired
participants with the equivalent of 25-35 percent of the pre-retirement group
life insurance benefit under the Company's group insurance plan for salaried
employees. The Company has purchased insurance on the lives of the participants,
which is projected to allow the Company to recover the entire cost of this plan.
Stock Option Plan. The Southern Indiana Gas and Electric Company 1994 Stock
Option Plan (the "Option Plan") was adopted by the Board of Directors at its
meeting held December 21, 1993, subject to shareholder approval and any
necessary regulatory approval. (The Option Plan is being submitted to a vote of
shareholders at this year's Annual Meeting.) No options will be granted unless
and until shareholder approval has been obtained and no securities or cash were
realized by participants during the year 1993. (See Item No. 2 on pages 5-6 for
additional information.)
Compensation Committee Report on Executive Compensation
The Company's Executive Compensation Program is administered and monitored
by the Compensation Committee of the Board of Directors. The main objectives of
the program are:
o attract and retain an outstanding management team,
o motivate and reward outstanding performance results, and
o focus attention on plans, goals, and initiatives which enhance value
to the shareholders and customers of the Company.
Prior to 1994, the executive compensation program consisted of two
elements: base salaries, and an annual Corporate Performance Incentive Plan.
During 1993, the Compensation Committee and the Board of Directors approved a
long-term stock option plan, effective January 1, 1994, subject to approval by
the shareholders of the Corporation and any necessary regulatory approval. In
addition, several changes were made to the annual Corporate Performance
Incentive Plan for implementation during the 1994 plan year and beyond. These
matters are discussed below.
Base Salary Plan. The Compensation Committee determines the annual base
salaries for the Company's mandatory officers and the salary ranges for all
officer positions. The determination of officer salaries and salary ranges is
based upon competitive norms (averages) for similar positions in reasonably
comparable electric and combination utility companies. The Company retains an
independent consultant to provide such information to the Compensation
Committee.
8
<PAGE>
Adjustments to actual base salaries take into consideration two key
variables: 1) the performance of the officer, and 2) the level of actual salary
compared with the midpoint of the applicable salary range, where midpoint is
defined as the competitive salary norm for the position. In general, individuals
whose performance is deemed fully competent over several years would be expected
to achieve a base salary at the midpoint level.
Corporate Performance Incentive Plan. The annual Corporate Performance
Incentive Plan (the "Performance Plan") provides for the payment of additional
compensation contingent upon the achievement of certain specific stockholder and
customer-related goals. Approximately 25 officers and senior management
personnel participate in the Performance Plan. Goal achievement is primarily
judged on a comparison with the results of ten similar companies in five
critical results areas as set forth in the table on page 10. In addition, plan
participants are also judged on their achievement of specific individual goals
which are developed in support of corporate objectives. These individual goals
are often, but not exclusively, related to the implementation of initiatives
contained in the Company's long-term strategic plan.
Through the 1993 Performance Plan year, payments, if any, could amount to
5-25 percent of base salary on an individual basis. During 1993, the
Compensation Committee approved a plan design change in potential award levels
for the three senior officers of the Corporation. Beginning in 1994, the award,
if any, for the chief Executive Officer can amount to 20-30 percent of base
salary, and the awards, if any, for the two senior vice presidents can amount to
10-30 percent of base salary. These changes were made to bring the Performance
Plan into closer alignment with competitive norms which recognize the greater
responsibilities of senior officers of the corporation. Total payments, if any,
under the Performance Plan are limited in the aggregate to one and one-half
percent of net income of the Company earned during the Performance Plan Year.
In addition, the Performance Plan for 1994 and beyond was revised to
include comparison of five-year cumulative total return as a corporate
performance measure replacing three year annual net income growth. The
Compensation Committee believes this new performance measure provides a better
and broader gauge of shareholder value, and is more in keeping with the spirit
and intent of the required performance graph included herein.
The Company retains an independent consultant to assist in the process of
goal formulation and to provide an independent assessment of goal achievement to
the Compensation Committee at the end of each Performance Plan year. The annual
awards under the Performance Plan for years 1991, 1992, and 1933 are shown in
column (d) of the Summary Compensation Table.
Long-Term Stock Option Plan. During 1933, the Compensation Committee and
the Board of Directors adopted a long-term stock option plan, effective January
1, 1994, subject to approval by the Company's stockholders and any necessary
regulatory approval. The Compensation Committee believes that stock options
provide a desirable method of long-term compensation because they closely align
the interests of management with long-term shareholder value. They also
encourage equity ownership in the Company by plan participants.
If approved by shareholders, it is anticipated that stock option grants
will be awarded to approximately 25 officers and senior management personnel of
the Company. A description of the Long-Term Stock Option Plan is provided
herein.
Discussion of CEO Pay. Consistent with overall executive compensation
program philosophy, the Compensation Committee structured the CEO's total
compensation during 1993 based on the overall performance of the Company,
competitive pay levels for CEO's in the utility industry, and a multi-year plan
for the CEO to achieve a base salary level at or about the established midpoint
for the position.
During 1993, the Compensation Committee took the following actions
regarding the CEO:
1. Increased base salary to $280,000 per year. This represented an
increase of 8.9%, but is still below the midpoint of the salary range.
Assuming continued favorable corporate performance, it is anticipated that
midpoint salary level will be achieved within two more years.
2. Provided a cash incentive of $25,720, based on results achieved
under the Corporate Performance Incentive Plan.
9
<PAGE>
During the Performance Plan year, SIGECO's performance as measured against
its ten company comparison group resulted in the following:
Key Performance Index Objective SIGECO Rating
- --------------------------------------------------------------------------------
Market to Book Ratio Highest 2nd best (highest)
3-Year Average Annual Net Income Growth Highest 8th best (highest)
Electric Revenue per Kwh Lowest 2nd best (lowest)
Gas Revenue per Mcf Lowest 2nd best (lowest)
3-Year Average Annual Growth of Net Lowest 7th best (lowest)
Operating Expense per Customer
Under the Performance Plan formula, these performance ratings earned a
threshold incentive award of 10% of base salary for the CEO.
Compensation Committee
R. W. Shymanski, Chairman J. S. Vinson
R. L. Koch II N. P. Wagner
J.H. Schroeder
Performance Comparisons
As required by the Securities and Exchange Commission, set forth below is a
line graph comparing the yearly change in the cumulative total shareholder
return on the Company's common stock, assuming reinvestment of all dividends,
against the cumulative total return of the S & P Composite 500 Stock Index and
the S & P Utilities Index, over the past five years.
Comparison of Five-Year Cumulative Total Return
1988 1989 1990 1991 1992 1993
---- ---- ---- ---- ---- ----
SIGECO ........... 100 116 128 187 197 206
S&P 500 ... ...... 100 132 131 166 178 197
S&P Utilities .... 100 147 143 164 178 203
(this table appeared as a line chart in the printed proxy)
10
<PAGE>
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee were employees or
officers of the Company at the time of their committee action. Mr. Wagner was
formerly an officer of the Company, as described on page 3 under "Election of
Directors." He also serves as non-employee Chairman and Chief Executive Officer
of the Company's subsidiary, Southern Indiana Properties, Inc. It is the opinion
of the Board of Directors that Mr. Wagner's years of experience in the industry
and familiarity with industry practices provides valuable insight to the
Compensation Committee in the discharge of its duties.
Mr. Goebel, an executive officer of the Company, is a member of the Board
of Directors of UF Bancorp, Inc., of which Mr. Rausch is Chairman, President and
Chief Executive Officer.
Item 3-Ratification of Appointment of Auditors
It is intended that, unless otherwise specified by the stockholders, votes
will be cast pursuant to the proxies hereby solicited in favor of the
ratification of the appointment by the Company's Board of Directors of Arthur
Andersen & Co. as independent auditors of the Company for the year 1994. The
Arthur Andersen firm has acted for the Company in this capacity since 1918. The
Company is advised that neither the firm nor any of its partners has any
financial interest in or any connection with the Company except in the capacity
of the Company's auditors. A representative of Arthur Andersen & Co. will attend
the annual meeting of stockholders and will be available to answer any questions
and may make a statement if he so desires.
The Board of Directors recommends a vote "for" ratification
of the appointment of auditors.
Stockholders Proposals
Proposals by stockholders to be presented at the next annual meeting of
stockholders to be held on March 28, 1995 must be received by the Company on or
before October 25, 1994 for inclusion in the Company's Proxy Statement relating
to such matters.
By Order of the Board of Directors,
A.E. Goebel, Secretary
Evansville, Indiana
Date: February 22, 1994
11
<PAGE>
EXHIBIT A
SOUTHERN INDIANA GAS & ELECTRIC COMPANY
1994 STOCK OPTION PLAN
I. Purpose
The purposes of Southern Indiana Gas & Electric Company's 1994 Stock Option
Plan (the "Plan") are to promote the long-term success of Southern Indiana Gas &
Electric Company (the "Company") and its subsidiaries, and to attract, retain,
and motivate key employees while creating a long-term mutuality of interest with
shareholders by encouraging and enabling stock ownership.
II. Administration
(a) The Plan shall be administered by the Compensation Committee (the
"Committee"), consisting of three or more non-employee members of the Board of
Directors of the Company (the "Board"), all of whom shall be "disinterested
persons" as such term is defined in the rules of the Securities and Exchange
Commission, as amended from time to time.
(b) The Committee shall have all the powers vested in it by the terms of
the Plan, such powers to include exclusive authority (within the limitations
described herein) to select the employees to be granted options, to determine
the size and terms of the options to be granted to each employee selected, to
determine the time when options will be granted, the period during, and the
events upon which, options will be exercisable, and to prescribe the form of the
agreements embodying options granted under the Plan. The Committee shall be
authorized to interpret the Plan and the options granted under the Plan, to
establish, amend and rescind any rules and regulations relating to the Plan, and
to make any other determinations which it believes necessary or advisable for
the administration of the Plan. The Committee may correct any defect, supply any
omission or reconcile any inconsistency in the Plan or in any option in the
manner and to the extent the Committee deems necessary or desirable to place it
into effect.
(c) The Committee shall maintain a written record of its proceedings. Any
decision of the Committee in the administration of the Plan, as described
herein, shall be final and conclusive. The Committee may act only by a majority
of its members in office, except that the members thereof may authorize any one
or more of their number or any officer of the Company to execute and deliver
documents on behalf of the Committee.
III. Eligibility For Award
Key employees of the Company or any subsidiary of the Company are eligible
to receive options under the Plan.
IV. Allotment of Shares
Shares of common stock of the Company to be issued under the Plan shall be
made available, at the discretion of the Board and subject to any necessary
regulatory approval, either from authorized but unissued shares or from issued
shares reacquired by the Company. Subject to provisions of Section IX hereof,
the aggregate number of shares of common stock that may be issued under the Plan
shall not exceed 500,000 shares. Where options are for any reason cancelled, or
expire or terminate unexercised, the shares covered by such option shall again
be available for grant of options within the limits provided by the preceding
sentence. Options may be allotted to eligible employees at such times and in
such amounts as the Committee, in its sole discretion, may determine, provided,
however, that in the case of options which are intended to be incentive stock
options ("Incentive Stock Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986 (the "Code"):
(i) the option holder, at the time the option is granted, shall not own
common stock equaling more than 10% of the total combined voting power
of all classes of stock of the Company, and
(ii) the aggregate Fair Market Value (determined at the time the option is
granted) of the stock with respect to which the options are
exercisable for the first time by an individual during any calendar
year (under all such plans of the Company and any parent or subsidiary
corporations) shall not exceed $100,000.
A-1
<PAGE>
V. Granting of Options
All options granted under the Plan shall be in such form as the Committee
may from time to time approve. The Committee shall determine in each case
whether the options are Incentive Stock Options or Nonqualified Stock Options.
All options granted under the Plan shall be subject to the following terms and
conditions:
(a) Option Price. The Committee shall determine the option price per share
with respect to each option granted; provided, however, the option
price shall not be less than 100% of the Fair Market Value of the
common stock at the date the option is granted.
(b) Period of Option. Unless a shorter period is fixed by the Committee or
another provision of this Plan, each option may be exercised during a
period of ten years from the date the option was granted.
(c) Payment. The option price shall be payable (i) in cash, (ii) by tender
to the Company of shares of Company stock owned by the option holder,
(iii) by delivery (in form approved by the Committee) of an
irrevocable direction to a securities broker acceptable to the
Committee to (x) sell shares subject to the option and to deliver all
or a part of the sales proceeds to the Company in payment of all or a
part of the purchase price and withholding taxes due or (y) pledge
shares subject to the option to the broker as security for a loan and
to deliver all or a part of the loan proceeds to the Company in
payment of all or a part of the purchase price and withholding taxes
due, or (iv) by any combination of the foregoing. No shares shall be
issued until full payment has been made or satisfactorily arranged
for. A holder of an option shall have none of the rights of a
shareholder until the shares are issued.
(d) Exercise of Options. The shares covered by an option may be purchased
on such installments and on such exercise dates as the Committee may
determine, provided, however, that no option shall become exercisable
until at least six months after grant unless disability of the option
holder occurs before the expiration of the six-month period. Any
shares not purchased on the applicable exercise date may be purchased
thereafter at anytime prior to the final expiration of the option. In
no event shall any option be exercisable after the expiration of ten
years from the date upon which the option was granted. Each option
shall become exercisable according to terms set by the Committee at
the time of grant, except as specified in Section VII (Acceleration of
Exercisability on Change of Control). The Committee may direct that an
option become exercisable in installments, which need not be annual
installments, over a period which may be less than the term of the
option. At such time as an installment shall become exercisable, it
may be exercised at anytime thereafter in whole or in part until the
expiration or termination of the option. The Committee may, in its
sole discretion, prescribe shorter or longer time periods and
additional requirements with respect to exercise of an option.
(e) Nontransferability of Options. An option granted under the Plan may
not be transferred except by will or the laws of descent and
distribution and, during the lifetime of the employee to whom granted,
may be exercised only by such employee, or his or her guardian or
legal representative.
(f) Termination of Employment. Upon the termination of an option holder's
employment (for any reason other than retirement, disability, death or
termination for willful or gross misconduct), all rights under the
Plan will expire immediately on date of such termination. If an option
holder's employment is terminated for willful or gross misconduct, as
determined by the Board, all rights under the option shall expire upon
receipt by the option holder of the notice of such termination.
(g) Retirement or Disability of an Option Holder. In the event of an
option holder's disability (within the meaning of Section 22(e)(3) of
the Code) or retirement as an employee, option privileges shall apply
to those shares immediately purchasable at the date of separation from
service. The Committee, in its sole discretion, may provide that any
options outstanding but not yet exercisable upon date of such
separation from service of the option holder may become exercisable in
accordance with a schedule determined by the Committee; provided,
however, that in the event of retirement no options shall become
exercisable until at least six months after grant. Option privileges
under Incentive Stock Options shall expire unless exercised within
three months from the date of separation in the case of retirement, or
within twelve months in the case of disability, but no later than the
date on which the option terminates. Option privileges under
Nonqualified Stock Options shall expire unless exercised within five
years from the date of separation, but no later than the date on which
the option terminates.
A-2
<PAGE>
(h) Death of Option Holder. Upon the death of an option holder, option
privileges shall apply to those shares which were immediately
purchasable at the time of death. Option privileges shall expire
unless exercised by legal representatives or beneficiaries within one
year after the date of the employee's death, but no later than the
date on which the option terminates.
VI. Cash Payment
The Committee may, from time to time, grant or provide for the grant of
dividend equivalents in respect of options. In respect of any such option that
is outstanding on a dividend record date for shares covered by the option, the
optionee may be credited with an amount equal to the amount of cash or stock
dividends that would have been paid on the shares covered by the options if the
covered shares had been issued and outstanding on the dividend record date.
Subject to the terms of this Plan and any applicable option agreements, the
Committee shall establish rules and procedures governing the crediting of
dividend equivalents, including the timing and payment contingencies that apply
to the dividend equivalents, as the Committee deems necessary or appropriate and
which shall comply with Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, and other applicable law. Dividend equivalents shall be paid only in
cash.
VII. Acceleration of Exercisability on Change of Control
Upon a Change of Control of the Company, all options theretofore granted
and not previously exercisable shall become fully exercisable to the same extent
and in the same manner as if they had become exercisable by passage of time in
accordance with the provisions of the Plan relating to periods of exercisability
and to termination of employment.
A "Change of Control" shall be deemed to have occurred if:
(i) any individual, firm, trust, partnership, association, corporation or
other entity becomes the beneficial owner, directly or indirectly, of
20% or more of the outstanding voting stock of the Company, provided,
however, that such an event shall not constitute a Change of Control
if such shareholder has established an agreement with the Company,
approved by the Board, which materially restricts the right of such
shareholder to direct or influence the management or policies of the
Company; or
(ii) in any solicitation of proxies from the security holders of the
Company for the election of directors, proxies are solicited by or on
behalf of a person or entity other than the Board and, upon the
conclusion of such solicitation, nominees of such person or entity are
elected to one-half or more of the then available positions on the
Board.
The merger or consolidation of the Company with any other entity shall not,
as such, be regarded as a Change of Control for the purposes of this Plan. The
effect of such a merger or consolidation shall be determined by the provisions
of this Section.
VIII. Fair Market Value
"Fair Market Value" shall mean the value of a share of common stock on a
particular date, determined as follows: (i) if the common stock is not listed on
such date on any national securities exchange, the average between the highest
"bid" and lowest "offered" quotations of a share on such date (or, if none, on
the most recent date on which there were bid and offered quotations of a share,
as reported by the National Association of Securities Dealers Automated
Quotations System, or other similar service selected by the Committee; (ii) if
the common stock is neither listed on such date on a national securities
exchange nor traded in the over-the-counter market, the fair market value of a
share on such date as determined in good faith by the Committee; or (iii) if the
common stock is listed on such date on one or more national securities
exchanges, the last reported sale price of a share on such date as recorded on
the composite tape system, or, if such system does not cover the common stock,
the last reported sale price of a share on such date on the principal national
securities exchange on which the common stock is listed or, if no sale of common
stock took place on such date, the last reported sale price of a share on the
most recent day on which a sale of a share took place as recorded by such system
or on such exchange, as the case may be.
A-3
<PAGE>
IX. Adjustment in the Event of Recapitalization
In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the corporate structure of the Company, the Committee shall make
such adjustments, if any, as are appropriate in the number and kind of shares
that may be issued under the Plan, in the number and kind of shares covered by
the options granted and in the option price.
X. Amendments and Discontinuance
The Board may discontinue the Plan at any time and may from time to time
amend or revise the terms of the Plan as permitted by applicable statutes,
except that it may not revoke or alter, in a manner unfavorable to the holders,
any options then outstanding, or amend the Plan without shareholder approval so
as to materially: (i) increase the benefits accruing to participants under the
Plan; (ii) increase the number of securities which may be issued under the Plan;
(iii) modify the requirements as to eligibility for participation in the Plan;
or (iv) increase the cost of the Plan to the Company.
XI. Compliance With Rule 16b-3
With respect to persons subject to Section 16 of the Securities Exchange
Act of 1934 (the "1934 Act"), transactions under the Plan are intended to comply
with all applicable conditions of Rule 16b-3 or its successors under the 1934
Act. To the extent any provisions of the Plan or action by the Committee fails
to so comply, it shall be deemed null and void, if permitted by law and deemed
advisable by the Committee.
XII. Miscellaneous
By accepting any benefits under the Plan, each option holder and each
person claiming under or through such optionee shall be conclusively deemed to
have indicated acceptance and ratification of, and consent to, any action taken
or made or to be taken or made under the Plan by the Company, the Board, the
Committee or any other committee appointed by the Board. No option holder or any
person claiming under or through him or her shall have any right or interest,
whether vested or otherwise, in the Plan or in any option, unless and until all
of the terms, conditions and provisions of the Plan and the related option
agreement that affect such option holder or such other person shall have been
complied with. Nothing contained in the Plan or in any agreement shall require
the Company to segregate or earmark any cash or other property. Neither the
adoption of the Plan nor its operation shall in any way affect the rights and
powers of the Company or any of its subsidiaries to dismiss and/or discharge any
employee at any time.
The provisions of the Plan shall take precedence over any conflicting
provision contained in an option. The Plan shall be governed by and construed in
accordance with the internal substantive laws, and not the choice of law rules,
of the State of Indiana. If any term or provision of the Plan is held by a court
of competent jurisdiction to be invalid, void or unenforceable, the remainder of
the terms and provisions will remain in full force and effect and will in no way
be affected, impaired or invalidated.
XIII. Withholding Obligations
(a) As a condition to the delivery of any shares pursuant to the exercise
of an option, the Committee may require that the optionee, at the time
of such exercise, pay to the Company an amount sufficient to satisfy
any applicable tax withholding obligations.
(b) The Committee, in its sole discretion, may permit an optionee to
satisfy all or a part of the withholding tax obligations incident to
the exercise of an option by having the Committee withhold a portion
of the shares that would otherwise be issuable to the optionee. Such
shares shall be valued based on their fair market value on the date
the tax withholding is required to be made. Any such share withholding
with respect to an optionee subject to Section 16(a) of the Exchange
Act shall be subject to such limitations as the Committee may impose
to comply with the requirements of Section 16 of the Exchange Act.
A-4
<PAGE>
XIV. Securities Law Compliance
No shares shall be issued hereunder unless counsel for the Company shall be
satisfied that such issuance will be in compliance with applicable Federal and
state securities laws.
XV. Effective Date and Term of The Plan
The 1994 Stock Option Plan shall become effective on January 1, 1994
subject to prior approval of the shareholders. No option shall be granted
pursuant to this Plan after December 20, 2003. However, options theretofore
granted may extend beyond that date in accordance with their terms and the
provisions of the Plan.
A-5
SOUTHERN INDIANA GAS AND ELECTRIC COMPANY
(PROXY - Solicited on Behalf of the Management)
The undersigned hereby appoints R.G. REHERMAN, or in the event of his absence,
A.E. GOEBEL, his attorney and proxy, in the order herein named, each with power
of substitution, to vote at the annual meeting of stockholders of SOUTHERN
INDIANA GAS AND ELECTRIC COMPANY to be held at Evansville, Indiana on March 22,
1994 or any adjournment thereof, according to the number of votes that the
undersigned would be entitled to vote if personally present, as follows:
(Management recommends a vote "FOR" each of the items below)
(1) ELECTION OF DIRECTORS (three-year term):
FOR all nominees listed below or any /_/ WITHHOLD AUTHORITY to /_/
substitute therefor if unable to serve vote for all nominees
(except as written to the contrary listed below
below)
Nominees - Ronald G. Reherman, Donalf E. Smith, and James S. Vinson
INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write the nominees name below:
_______________________________________________________________________
(2) APPROVE A STOCK OPTION PLAN AND THE
RESERVATION OF SHARES THEREUNDER AS
DESCRIBED IN THE PROXY STATEMENT. FOR /_/ AGAINST /_/ ABSTAIN /_/
(3) RATIFICATION OF APPOINTMENT OF AUDITORS: FOR /_/ AGAINST /_/ ABSTAIN /_/
all as more fully set forth in the proxy statement received by the undersigned
and on all other matters that may legally come before the meeting.
(Continued, and to be signed, on reverse side)
The signature should correspond with the name as it appears hereon. Where stock
is registered in the names of two or more persons, all should sign. Persons
signing as executors, administrators, trustees, etc., should so indicate. A
proxy executed by a corporation should be signed in its name by an executive
officer.
IF NOT OTHERWISE INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF
DIRECTORS, FOR THE APPROVAL OF THE STOCK OPTION PLAN, AND FOR THE RATIFICATION
OF THE APPOINTMENT OF AUDITORS.
Please sign here exactly|> ________________________________ Dated: ______, 1994
as name appears below ________________________________
/_/ I PLAN TO ATTEND THE MEETING
Proxy For
Annual Meeting
of Stockholders
To Be Held
March 22, 1994
The management requests that you sign, date, and return this proxy in the
enclosed envelope which requires no postage. If you attend the meeting and so
request, the proxy will not be voted.
"'0000009997'" ':111111111'" 1111111111"' "'1111111111'"
(Continued from reverse side)
